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Gillette: Product andMarketing Innovation 1

C A S E

Synopsis: Gillette has long been known for innovation in both product development andmarketing strategy. In the highly competitive, but mature, razor and blademarket, Gillette holds a commanding worldwide market share. The peak of itsinnovation occurred in 2006 with the introduction of the Fusion 5-bladedrazor. Today, innovation in razors and blades is thwarted by a lack of newtechnology and increasing consumer reluctance to pay for the ‘‘latest andgreatest’’ in shaving technology. Gillette must decide how to put the razor warsbehind them and maintain or increase its share of the global razor market.

Themes: Product leadership, product innovation, pricing strategy, integratedmarketing communication, segmentation, sports marketing, global marketing,SWOT analysis, strategic focus

Since its inception in 1901, Gillette has always prided itself on providing the bestshaving care products for men and women. In fact, the company was so visionarythat it didn’t have any serious competition until 1962, when Wilkinson Sword

introduced its stainless steel blade. Since that time, the Wilkinson Sword–SchickCompany has evolved into Gillette’s primary competitor. Through the years, Gillette hasstrived to stay on the cutting edge of shaving technology in a market that thrives oninnovation. This focus has led to a game of one-upmanship with Schick as eachcompany introduced 3-bladed (Gillette’s Mach3), 4-bladed (Schick’s Quattro), and5-bladed (Gillette’s Fusion) razors in rapid succession. Now, under the ownership andguidance of Procter & Gamble, Gillette faces a saturated U.S. market that fluctuates onlywhen newer, more innovative products are introduced. However, many analysts believethat Gillette and Schick have reached the end of meaningful product innovation. Giventhis, Gillette faces the challenge of further expanding its already dominant market sharearound the world. And in a market that thrives on innovation, Gillette must determinehow to balance the continued investment of resources in research and development,searching for ‘‘the next big thing’’ in the global shaving market, with capturing more of

Leanne Davis, Florida State University MBA Class of 2010, prepared this case for classroom discussion rather than toillustrate effective or ineffective handling of an administrative situation. This is a revised version of the case developed byDon Roy, Middle Tennessee State University, and Michael D. Hartline, Florida State University.

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Copyright 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.

their loyal consumers through product-line expansions and inspiring marketingcampaigns.

The History of Innovation at Gillette

Born in Fond du Lac, Wisconsin in 1855, King Camp Gillette learned from an earlyage the importance of self-sufficiency, innovation, and invention. After his family’shome was destroyed in the Chicago Fire of 1871, Gillette left home at 16 years of ageto become a traveling salesman. His experiences in his position led him to WilliamPainter, the inventor of the disposable Crown Cork bottle cap, who assured him that asuccessful invention was one that was purchased over and over again by a satisfiedcustomer. In 1895, after several years of considering and rejecting possible inventions,Gillette suddenly had a brilliant idea while shaving one morning. It was an entirelynew razor and blade that flashed in his mind—a razor with a safe, inexpensive, anddisposable blade. According to reports, Gillette’s idea wasn’t immediately successful,as technical experts said it would be impossible to produce steel that was hard, thin,and inexpensive enough for commercial development of the disposable razor blade.However, in 1901, with the technical partnership of MIT graduate William Nickerson,Gillette produced the original Gillette safety razor and blade, establishing the foun-dation for the Gillette Safety Razor Company.

Since 1901, the Gillette Company has led the personal care and groomingindustry through manufacturing efficiency and exceptional marketing. By offering‘‘consumers high-quality shaving products that would satisfy basic grooming needs ata fair price,’’ Gillette effectively captured more than half of the entire razor and bladesmarket across the globe. In fact, in the 1920s Gillette said the following of his razorproduct: ‘‘There is no other article for individual use so universally known or widelydistributed. In my travels, I have found it in the most northern town in Norway and inthe heart of the Sahara Desert.’’

Gillette’s success in this market carried the company through economic droughtsin the 1920s and 1930s, as well as allowed it to weather the storm brought on byWorld War II. In 1948, Gillette set its all-time performance record with profits pershare of $6.80. Encouraged by the successful development of his razor products,Gillette felt inclined to challenge his entrepreneurial spirit with the acquisition of twounrelated ventures: the Toni Company, maker of do-it-yourself home permanent-wavekits, and the Paper Mate Pen company, producer of retractable, refillable ballpointpens. Although seemingly profitable at first, both acquisitions proved to be unsuc-cessful as sales and revenue waned due to declining demand and innovative com-petitors, such as Bic’s low-priced disposable (nonrefillable) pens from France. As aresult, Gillette’s unblemished track record for success became tarnished as net profitsslumped to $1.33 per share in 1964.

Despite this fact, Gillette reigned as a visionary monopoly in the personal shavingmarket until 1962, when English firm Wilkinson Sword introduced its stainless-steelblade. Distracted by its experimental ventures with the Toni Company and PaperMate, Gillette neglected to foresee the impact this small company could have on its

388 C A S E 1 Gillette: Product and Marketing Innovation


core business of razors and blades and began to lose a substantial portion of marketshare. Although Gillette retained 70 percent, the arrival of Wilkinson Sword’s stain-less-steel blade initiated a transition in niche markets. For the first time, Gilletteexecutives were unsure how to respond. Should they introduce their own stainless-steel blade or ignore the rival and hope that its market niche would remain small?Fortunately for Gillette, Wilkinson Sword lacked the resources necessary to exploitthe niche markets it had penetrated and where it competed with Gillette. Eventually,Wilkinson Sword sold much of its blade business to Gillette. Unfortunately, by thistime Gillette had already begun to feel the impact of competition as its market sharehad dipped to an all-time low of 49 percent.

To revive Gillette’s market share and bounce back from unsuccessful productventures into do-it-yourself permanent-wave kits and refillable ballpoint pens,Gillette’s new CEO Vincent Ziegler spearheaded an acquisition and product devel-opment campaign. Ziegler was often described as aggressive, marketing oriented, andambitious for the company, believing in diversification through the acquisition ofcompanies in other business segments. Under Ziegler’s leadership, Gillette purchasedthe following companies: Braun AG (German manufacturer of small appliances),S.T. Dupont (French maker of luxury lighters), Eve of Roma (high-fashion perfume),Buxton Leather goods, Welcome Wagon, Inc., Sterilon hospital razors, and JafraCosmetics (home sales). Unfortunately, four of these acquisitions proved to be un-profitable or unsuitable and were divested, and the other three yielded low profits byGillette’s standards. These ill ventures exposed the company to competitive pressures,especially in the form of Bic’s disposable razors and lighters. In addition, Bic’s 19-centdisposable stick pens particularly affected the Paper Mate line of refillable pens anddrove Paper Mate’s share of the retail ballpoint pen market from more than 50 percentdown to 13 percent. In 1975, Gillette retaliated with the introduction of its new WriteBrothers line of disposable pens and salvaged a good portion of the lost market sharewith heavy price promotions.

Despite these pressures, Gillette experienced moderate successes under theleadership of Ziegler with the introduction of Cricket disposable lighters and Soft &Dri antiperspirant (until the industry experienced a sharp decline in sales of the sprayproduct due to the belief that aerosols destroy the ozone layer). Furthermore, theintroduction of the Trac II razor was deemed a ‘‘great success’’ and thus continuedGillette’s dominance in this market. Other successful product developments cameunder the leadership of Colman Mockler, Gillette’s next CEO, whose strategy was to‘‘cut costs dramatically and pour the money saved into ad and product developmentbudgets.’’ Under Mockler, Gillette experienced some of its greatest successes includingmemorable innovations such as the Atra razor, the Good News! disposable razor, andthe Daisy razor for women. After these product additions, Gillette held roughly75 percent of the global market in razors and blades, including a majority of the U.S.shaving market (razors, blades, and the leading shaving cream). By the end of 1980,Gillette’s sales rose above $2 billion for the first time in the company’s history.

The foundation of this success was the introduction of new products for the razorand blade market developed in Gillette’s home laboratories. As previously mentioned,

The History of Innovation at Gillette 389


Gillette’s Atra-Plus shaving system, which featured a refillable Atra cartridge with alubricating strip, overtook the Trac II as the number one selling razor. In addition, todirectly compete with Bic and other razor companies, Gillette updated its Good News!line to include a disposable razor with a lubricating strip. Furthermore, in the personalcare segment, Gillette made several introductions, including Aapri facial care prod-ucts, Dry Idea deodorant, Bare Elegance body lotion, Mink Difference hair spray,White Rain hair care products, and Silkience shampoo and moisturizers. Theseadditions had mixed results and left Gillette still searching for the keys to success inthis business segment. In the writing instruments segment, Gillette achieved moderatesuccess with the development of Eraser Mate erasable, disposable pens. Also, thesteady sales of Paper Mate pens and Liquid Paper correction fluids helped to maintaincompany performance.

The Razor Wars Begin

By 1990, Gillette found itself in the interesting position of cannibalizing its ownsuccessful products with the launch of the Sensor razor. The Sensor soared in salesglobally and quickly dominated the market, only to be succeeded by the Sensor Excelin 1993. This was not the first competing product produced by Gillette; however, itrepresented the first product that was able to effectively shift consumer demand andsales away from the Atra and Trac II—Gillette’s leading products. A similar effectoccurred in the women’s razor market with the development of the Sensor for Womenin 1992 and the Sensor Excel for Women in 1996. As to be expected, the continuedsuccess of the Sensor family of shaving systems led to the gradual decline of the Atraand Trac II twin-blade shaving systems. However, despite this decline, the Atra andTrac II razors continued to hold decent market share positions worldwide. In addition,holding steady since 1976, Gillette’s Good News! brand maintained its position as thebest-selling disposable razor in its product category worldwide.

Gillette’s internal competition heated up with the introduction of the Mach3 razorin 1998. Touting three thin blades designed to provide a closer shave with fewerstrokes and less irritation, the Mach3 became Gillette’s most successful new productever as sales rose to $1 billion in the first 18 months. Recognized for its innovativedesign (blades on tiny springs), the Mach3 was named winner of the American Mar-keting Association’s Grand Edison Award for the best new product of 1998. Similar tothe marketing strategy employed for the Sensor and Sensor Excel products, Gillettesequentially produced the Mach3 Turbo for men and the Venus system for women inan attempt to further expand the reach of Mach3 technology and market share.

In 2003, the razor wars got ugly as Gillette faced a new, more threatening com-petitor: Schick and the Quattro—the world’s first four-bladed razor. Before Schickintroduced the Quattro to the market, Gillette sued Energizer holdings and its Schickdivision, arguing that the Quattro illegally used the same ‘‘progressive geometry’’technology as the Mach3. However, despite the lawsuit, Schick was allowed to launchthe Quattro. To combat the suit, Schick countersued Gillette, claiming that Gillette’sadvertisements stating ‘‘the world’s best shave’’ and ‘‘the best a man can get’’ were



misleading. While Gillette and Schick engaged in a legal ping-pong match, consumerpreferences and purchases were changing. In addition to Schick’s Quattro for men, itsIntuition for women began to encroach upon Gillette’s hold of the women’s shavingmarket. Schick’s total share of the U.S. market had risen 2.9 percent to 17 percent,while Gillette’s total share of the razor and blades market had fallen 4.3 percent to63 percent.

To fight back, Gillette aggressively established a twofold plan of attack forrecapturing market share. This strategy included converting consumers to higher-priced razors and blades, such as the Sensor, Sensor Excel, and Mach3 lines, from thesingle- and twin-blade razors, and geographically expanding into the areas of Romaniaand the former Yugoslavia, the Soviet Union, and the Czech Republic. At the forefrontof Gillette’s strategy sat its secret weapon: the Fusion—the world’s first 5 (+1) bladerazor, introduced in 2006. Using a unique five-blade design with a single blade on theback of the cartridge for use in trimming mustaches and sideburns, the Fusionexploded off the shelves and sold more than 4 billion razors within the first twomonths. Furthermore, the Fusion razor represented the first product introductionsince Proctor & Gamble finalized its purchase of The Gillette Company and itssubsidiaries, including Braun, Duracell, and Oral-B.

Although the Fusion represented a victory for Gillette and P&G, the hypesurrounding its initial success was quickly fleeting. Other than being more expensivethan the Mach3 (each cartridge costing 75 cents to $1 more than the Mach3 cartridge),critics questioned why five blades were needed to get the best shave when Gillette hadtouted its three-bladed Mach3 as ‘‘the best a man can get’’ since the late 1990s. Inaddition, Consumer Reports concluded that there were no additional performancebenefits provided by the five-bladed Fusion, especially when compared to the Mach3.However, what was the most concerning for Gillette was the fact that sales reportsindicated that the razors were outselling the cartridge refills. This translated to aconsumer perception akin to a ‘‘novelty’’ product with a lack of staying power andproduct loyalty. Further, from a financial standpoint, Gillette feared not reaching thesales potential for the product combination, because it is well-known that razormanufacturers earn most of their profits from refills, not the initial razor purchase.Despite these concerns, the Fusion line continues to be a successful revenue generatorfor Gillette and its top-selling razor to date.

Gillette’s Recent Marketing Strategies

Rather than continue the razor wars by producing a six- or seven-blade razor, Gillettefocused on releasing complementary products, enhancing its existing product linesand expanding its intensely successful marketing strategy. To complement its alreadysuccessful razor and blades division, Gillette sought to expand its product portfolioinside the shower doors to create the full ‘‘shower experience.’’ For example, thelaunch of Gillette Hair Care and Body Wash for men, as well as its Clinical Strengthdeodorant, represented the most significant Gillette brand extensions outside of therazor and blades division, and aimed to reinforce the brand’s standing as the world’s

Gillette’s Recent Marketing Strategies 391


leading male-grooming authority. ‘‘We’ve earned the trust of the more than 600 mil-lion men who start their day with a Gillette razor,’’ said Chip Bergh, group president,Global Personal Care, Procter & Gamble. ‘‘By offering superior deodorant, bodywashes, and shampoos, we are able to reward that trust by giving guys what they wantand need in other areas of their grooming routines.’’

Because Gillette is in the maturity stage of its product life cycle, focusing on thesecomplementary products allows the company to increase its share of customer.Defined, share of customer refers to the percentage of each customer’s needs in aparticular area met by the firm and is exploited when a company with brand loyaltyeffectively capitalizes on that preference to market other products. Gillette’s ability toincrease its share of customer is greatly enhanced due to the resources available atProctor & Gamble. According to Clayton C. Daley, Jr., vice chairman and chief fi-nancial officer of P&G, ‘‘One of the objectives of the Gillette integration has been toleverage the strengths and technologies of both companies to develop new products.We’re generating revenue synergies by combining our superior science and male-grooming expertise to introduce these adjacent Gillette-branded products.’’

In addition to complementary products, Gillette’s primary focus has been on theextension of its core business and the marketing programs that support it. Goingbeyond simple brand advertising, many of the initiatives and activities introduced byGillette created a synergy between product development and marketing strategy. Forexample, building off the success of the Fusion and Fusion Power razor and blades,Gillette released the Fusion Power Phantom (Stealth in the United Kingdom) inFebruary 2007. The Phantom razor featured a redesigned handle and a darker colorscheme than the original Fusion Power. In addition, in February 2008, Gillettereleased another revision, the Fusion Power Phenom, redesigned with a metallic blueand silver satin chrome handles color scheme. Most recently, Gillette launched thegaming-inspired Fusion Power Gamer razor at the EA SPORTS Champions of GamingTournament in early 2009.

Sports Marketing Activities

Gillette’s lethal combination of marketing and product development stemmed fromthe fact that when it came to blades and razors, Gillette was not content with merelyhaving an innovative product. The company virtually turned its marketing into aquantitative science, pouring time and resources into marketing plans that werealmost military in their precision and implementation. Gillette’s stellar marketingstrategies date back to the Sensor and Senor Excel products and can be attributed, inlarge part, to the success of its current market position and yearly sales volume.Focused heavily on male-dominated sports marketing activities, Gillette’s marketingatlas included the following elements:

� On a grand scale, the company’s most visible promotion was and still is GilletteStadium – home to the NFL’s New England Patriots and soccer’s New EnglandRevolution. The facility, which seats nearly 70,000 fans, hosted the 2002 MLS Cup,2003 AFC Championship game, and four games of the 2003 FIFA Women’s World



Cup. By sponsoring these types of athletic activities, Gillette is able to reach aworldwide audience, as soccer is tremendously popular in Latin America andEuropean countries. It is particularly important to note that 60 percent of Gillette’ssales are generated outside the United States, so worldwide appeal is critical in itsmarketing strategies. Case in point: The company’s image and reputation morethan doubled in popularity after it signed soccer superstar David Beckham as itsworldwide spokesman in 2004.

� Launched in February 2007, Gillette heavily marketed the Gillette Championsprogram centered on the athletic and personal accomplishments of three of theworld’s greatest athletes—Tiger Woods, Roger Federer, and Thierry Henry.According to Gillette, each of these athletes personifies the essence of Gillette’sbrand: on and off the field, and ‘‘the best a man can get.’’ As a group, the GilletteChampions blurred the lines of ethnicity, nationality, and language, making themattractive in the global arena. As part of the Champions program, Gillette featurednumerous multimarket, targeted promotions based on the type of sport played byeach of its champions. For example, as part of the ‘‘Look Like a ChampionSweepstakes,’’ customers were offered a ‘‘once in a lifetime opportunity to learnhow to look and play like a like real champion with a private training session fromlegendary golf coach, Hank Haney.’’

� Other sports-themed marketing programs include the heavily invested NASCARmarketing program and the Gillette Young Guns program. Aimed at racing fanswith the purpose of driving sales for Gillette’s premium razors and shave careproducts, NASCAR and Gillette promoted the fast and furious life of men thoughtelevision, print, online, public relations, and event marketing tactics. Examplepromotions included Gillette’s consumer program coordinated with NASCAR’sChase for the Sprint Cup, and the Daytona 500 Flip Card Stunt. In the Case for theSprint Cup promotion, 10 lucky sweepstakes finalists from all over the country hadthe opportunity to experience ‘‘a race fan’s dream’’ as they zipped up their fire suitsand raced actual stockcars in a five-lap race. In addition to winning trophies, eachfinalist was coached by one of the six Gillette Young Guns, NASCAR’s top drivers(Kurt Busch, Dale Earnhardt, Jr., Carl Edwards, Jimmie Johnson, Jamie McMurray,and Ryan Newman). Other NASCAR/Gillette marketing partnerships included thelargest ever-attempted Daytona 500 Flip Card Stunt. Prior to the start of the race,more than 118,000 fans seated along the front stretch and backstretch of theracetrack participated in the stunt, which promoted the Fusion and Fusion Powershaving line. During the National Anthem, the fans held up the front of the cards,which displayed a patriotic design. Following the Anthem, participants flipped thecards over and revealed the Gillette Fusion logo. These and other promotionsearned Gillette the 2008 NASCAR Marketing Achievement Award, racing’s topsponsor award.

� Gillette continues to foster its relationship with Major League Baseball, a part-nership that dates back to 1910, when Gillette featured baseball greats like HonusWagner in ads for the original Gillette Safety Razor. In 2008, Gillette and MLB



created the ‘‘MLB Rookie of the Month Award presented by Gillette’’ thatencouraged fans to go online to the Gillette website and vote for their favoriteplayer. This proved to be mutually beneficial for Gillette and MLB as it droveInternet traffic to Gillette’s website as well as encouraged fans to becomemore engaged and involved in the sport of baseball. ‘‘Major League Baseball andGillette have a long standing and successful business relationship, so it is a greatpleasure to announce this new program that allows fans greater access to MajorLeague Baseball,’’ said John Brody, Senior Vice President, Corporate Sales &Marketing, Major League Baseball. ‘‘The ‘MLB Rookie of the Month Award pre-sented by Gillette’ will honor the finest young talent in the game, and our fans willplay an integral role in selecting the top performing rookie in both the Americanand National League each month.’’

� Capitalizing on one of the most fanatic audiences available, Gillette also partneredwith the NCAA to promote a clean, shaven ‘‘game face’’ with the Gillette ‘‘GameFace’’ college football promotion. ‘‘This is a truly a one-of-a-kind contest for theultimate college football fan,’’ said Michelle Potorski, Associate Marketing Direc-tor, Gillette Male Blades and Razors. ‘‘We’re looking to find the college football fanwho can best display their favorite school’s pride in the most unique way. We arelooking to college football fans to prove their pride.’’ Winners received theopportunity to be on a Gillette television commercial, take home an Xbox 360, andbe crowned the 2008 National ‘‘Game Face’’ Champion.

� Gaming has also become a Gillette-sponsored pastime. Reaching out to this pre-viously untargeted market group opened up a whole new ocean of customers whomay not have been as attracted to Gillette’s prior sports-heavy marketing strategy.By partnering with EA Sports and launching the Fusion Power Gamer razor,Gillette was able to tap into this market by launching the world’s largest multi-sport gaming competition. Giving gamers the attention they frequently lack inworldwide marketing schemes has been beneficial to both Gillette’s image andtheir market share. According to Gillette Champion Tiger Woods, ‘‘This programwill give guys the chance to play games at the highest level possible, which isalways exciting. To be the best at anything is an amazing feat.’’

� Audience marketing strategies include targeting alternative audience groups suchas young adults, the gay and lesbian market, and WWE wrestling fans. Forexample, current promotions include shipping a promotional Fusion razor tomales in the United States around the time of their 18th birthday, as well asproviding free razors to college campuses and national gym franchises. In Europe,Gillette has also attempted to reach the gay and lesbian market by placing ads inmedia such as the United Kingdom’s Gay Times.

Furthermore, in light of the depressed economy and decline in consumerspending, Gillette added an additional layer to its traditional sports-themed marketingconcerning pricing strategy. At the end of 2008, Gillette launched an advertisingcampaign reminding consumers of the value of Gillette’s blade technology. The new



Gillette Fusion television ad, featuring NASCAR star and Gillette Young Gun CarlEdwards, focused on the performance of the Gillette Fusion through sleek shots of therazor and the sounds of revving engines. The ad asked, ‘‘In the world of highperformance, what machine can you run for as low as $1 a week?’’ Edwards noted that,for as low as $1 a week, Gillette Fusion blades, are ‘‘money well spent.’’ The purposeof the campaign was to put into perspective the cost per week of the system anddownplay the concerns that Gillette’s razors and blades were too expensive in times ofeconomic distress.

Also in late 2008, Gillette debuted a new global brand campaign, the first in fiveyears, building upon the recent introduction of men’s hair styling and personal careproducts. With the purpose of expanding the brand and strengthening the emotionalbond among men, Gillette introduced ‘‘The Moment’’ campaign, a modernization ofGillette’s ‘‘The Best a Man Can Get.’’ According to P&G, Gillette ‘‘conducted extensiveglobal research among thousands of men, which revealed that even the most confidentguys have doubts at many moments throughout their lives. Also revealed was that menare looking for products that give them the confidence they want and need to step up,perform and look, feel and be their best.’’ ‘‘The Moment’’ campaign features everydayguys, as well as the Gillette Champions (Tiger Woods, Roger Federer, and DerekJeter), experiencing moments of doubt faced by every guy, whether it is the momenthe steps on the doorstep before a date, just before he delivers a presentation, or theseconds before sinking a crucial putt, and the role Gillette’s high-performance prod-ucts play in helping him gain the confidence to succeed in that moment.

Price vs. Innovation

Since 2007, Gillette has acknowledged that product quality and efficient marketing arethe core value propositions that set the pace for the success of Gillette’s product lines.‘‘If you have a significantly and demonstrably superior product or service, it really isquite meaningful,’’ said Benson P. Shapiro, a marketing consultant in Concord,Massachusetts. However, ‘‘If you don’t put it into language that gives a promise ofsomething better, people won’t try it.’’ But, according to William J. Flynn, the businessdirector of blades and razors at Gillette, ‘‘If you can create an appeal that gets them totry the product, the product will sell itself.’’

Unfortunately, despite its stellar marketing efforts, U.S. unit sales of Gillette’sblade cartridges fell roughly 10 percent every month during the economic recession of2008–2009. When combined with the fact that Gillette consistently raised prices tooffset higher production costs, it becomes clear that consumers have slowed theirpurchases of Gillette’s razor products. This is especially evident when compared to thesales of private-label disposable razors, which increased 19 percent over the same timeframe. ‘‘Sticker shock is happening now,’’ says Burt Flickinger III, a managing directorat consultancy Strategic Resource Group. ‘‘As we get deeper into the economicslowdown, there will be some really pronounced growth of private-label blades.’’

P&G, however, does not expect Fusion sales to slow and in fact asserts that theFusion shaving system continues to gain market share, which now stands at 36 percentof the U.S. shaving-systems market (up 4 percentage points from 2007). Instead of



private-label blades, the company blames declines in Gillette’s older shaving systemsfor taking away from Fusion’s gains. ‘‘P&G says that, although sales of blades andrazors have slowed in North America and Western Europe by about 1 percentagepoint, that has been offset by robust sales in emerging markets, which are growingat double-digit rates. According to P&G, Gillette holds 71 percent of the globalshaving market.

Looking Toward the Future

To succeed in the future and effectively ‘‘win’’ the razor wars and beyond, Gillette mustfind new ways to innovatively out-produce or out-market the competition. In essence,the challenge for Gillette is to push the envelope without creating innovations that areseen as trivial. In order to do so, they must consider several key factors.

Pricing Strategy

Approximately 1.3 billion men worldwide shave with a razor blade. Within the UnitedStates, 94 million men ages 15 years and older remove hair in some fashion. Of these,85 percent prefer to wet shave with a razor blade. The average American male beginsto shave between the ages of 14 and 16 and continues to shave for the majority of hislife. In addition, 100 million women in the United States, ages 13 years and older,remove hair in some fashion. Of these women, 94 percent prefer to shave with arazor blade.

On average, men in the United States shave 5.33 times per week, or 24 times amonth, and spend approximately $22 a month for razors, blades, and shave preparations.The retail price of a Fusion Power razor for men and a four-pack of replacementcartridges is $26.28—a full $4 higher than what the average man pays per month. Theretail price of a Fusion Power razor and an 8-pack of replacement cartridges is $40.98,almost doubling what the average man spends in a month. Similarly, U.S. women shavean average of 11 times per month and spend approximately $11 a month for razors,blades, and shave preparations. Gillette’s Venus Vibrance razor sells for $8.29 and itsreplacement cartridges cost $8.49 for a 4-pack. The total purchase price of $16.78 isalmost $6 higher than the monthly average. The price of an 8-pack of Venus Vibrancereplacement cartridges increases the total to $28.28, approximately $17 higher than theaverage amount spent per month. A price comparison of various brands in the men’sand women’s wet-shaving market is shown in Case Exhibit 1.1.

Global Target Markets

When considering possible increased global expansion, Gillette must consider the rolesthat culture, religion, and Western influences play in shaving behavior. For example,internationally, 15 percent of the world’s male population does not shave due todiscomfort from shaving; 7 percent does not shave for religious reasons; and 3 percent



simply does not care to shave. Being aware of these behavioral and cultural charac-teristics will allow Gillette to effectively segment and target those they will be mostsuccessful in transforming into customers. Similarly, although some women inEuropean countries choose not to shave for cultural reasons, others now prefer toengage in the activity as they increasingly embrace Western lifestyles. For example,younger generations of European women are being influenced by American moviesand television that depict women with sleek underarms and legs. By fostering adoptionof the shaving lifestyle, Gillette can effectively capitalize on this trend. In fact, ifEuropean women embraced hair elimination at the same pace as American women,total blade sales would increase by hundreds of millions each year.

C A S E E X H I B I T 1 .1WET-SHAVING PRODUCTS AND PRICES

BrandInitial Priceof Razor

Price of ReplacementCartridges

Men’s Products

Gillette Mach3 $8.79 12 for $25.19

Mach3 Turbo $9.79 8 for $21.29

Fusion (includes Phenom) $9.99 4 for $14.49

8 for $27.49

Fusion Power (includes Power Phenom) $11.99 4 for $14.49

8 for $27.49

Schick Quattro $9.99 4 for $10.49

8 for $19.99

Quattro Titanium $9.99 4 for $10.99

8 for $20.99

Bic Comfort 3 4 for $4.99

Comfort 3 Advanced 4 for $6.99

Women’s Products

Gillette Venus $5.99 4 for $10.49

8 for $19.29

Venus Divine $9.79 8 for $21.29

Venus Breeze $9.99 4 for $11.99

Venus Vibrance $11.99 4 for $11.99

Venus Embrace $12.99 4 for $15.49

8 for $28.49

Schick Quattro for Women $9.99 4 for $10.99

8 for $21.39

Silk Effects $5.99 5 for $8.99

Intuition Plus Refreshing Moisture $9.99 6 for $19.99

Intuition Plus Sensitive Care $9.99 6 for $19.99

Bic Soleil Triple Blade 4 for $6.99

Soleil Twilight 4 for $6.99

Source: Drugstore.com (http://www.drugstore.com) and CVS.com (http://www.cvs.com), accessed September24, 2009.

Looking Toward the Future 397


Technological Advances vs. Development Costs

In the past, razor manufacturers experimented with numerous technologicaladvancements to provide the perfect shave, including increasing the number of bladescontained in the cartridge, adding tiny electric motors for a powered shave, andimproving supplemental shaving products such as gels and lotions. In various patentinfringement suits attempting to defend its technology, Gillette lost in both the UnitedStates and in Europe. This proves that any innovation must be unique enough towarrant patent protection and not be categorized as a ‘‘trivial’’ enhancement. However,to develop truly unique products, firms like Gillette must spend millions in researchand development. When Gillette introduced the Mach3 in 1998, it spent $680 millionon research and product testing. The company spent slightly less than that amount todevelop the Fusion. In both cases, Gillette more than recouped its research invest-ment. However, as Gillette looks to future technological innovations, the companymust be concerned about broad consumer acceptance and whether its researchinvestment can be recovered in a reasonable time frame.

Conclusion

In many ways, Gillette and Procter & Gamble are in an enviable position. Gillette’sproducts dominate the global wet-shaving market. The company continues to grow,although slowly, in every worldwide market. Still, many industry analysts wonder ifGillette has reached the end of its historical innovation in wet-shaving technology.Thus far, Schick has not responded to the Fusion with a breakthrough innovation ofits own. Given that the wet-shaving market is mature, Gillette must depend oninnovation to perpetuate its dominance (whether in product design or marketing),as well as create an appeal that entices customers to try and purchase its products.By aligning that appeal with what customers value, Gillette has the potential toestablish a position of long-term product maturity and market dominance. In thatposition, it won’t matter how many blades a competitor puts on a razor.

Questions for Discussion

1. Evaluate product innovation at Gillette throughout its history. Has Gillette been avictim of its own success? Has product innovation in the wet-shaving marketcome to an end? Explain.

2. What do you make of the battle between Gillette and Schick? Is the battle of one-upmanship good for either company?

3. What actions would you recommend over the next five years that would helpGillette maintain its worldwide dominance in the shaving market? What specificmarketing program decisions would you recommend? Should Gillette be worriedabout Schick? Explain.



Sources

The facts of this case are from Gen Abelson, ‘‘Gillette Sharpens Its Focus on Women,’’The Boston Globe, January 4, 2009 (http://www.boston.com/business/articles/2009/01/04/gillette_sharpens_its_focus_on_women/?page=3); Afrooz Family, ‘‘VibratingGillette Razors,’’ MadPhysics.com, April 2, 2006; ‘‘Anti-RFID Campaigners LaunchGillette,’’ Frontline Solutions (Pan-European edition), 12(7), September 2003, p. 8;Julia Boorstin, ‘‘Can Fusion Become a Billion-Dollar Razor?’’ MSN Money, July 7,2006 (http://articles.moneycentral.msn.com/Investing/CNBC/TVReports/AfterHypedStartFusionHitsLull.aspx); Ellen Byron, ‘‘Gillette Sharpens Its Pitch forExpensive Razor,’’ The Wall Street Journal, October 6, 2008 (http://online.wsj.com/article/SB122325275682206367.html); Mercedes M. Cardona, ‘‘Gillette’s Mach3Captures Top Prize at Edison Awards,’’ Advertising Age, March 22, 1999, p. 54;Catherine Colbert, ‘‘Global Gillette,’’ Hoovers.com, July 6, 2006; ‘‘Shaving Stats forMen,’’ Razor-gator.com (http://www.razor-gator.com/ShavingFacts/shaving_facts_for_men.htm); Wes Conard, ‘‘3-blade Razor a Cut Above, Gillette says,’’ The CommercialAppeal, April 15, 1998; ‘‘Cutting Edge: Moore’s Law for Razor Blades,’’ The Economist,March 16, 2006, p. 8; CVS website, Consumer Products, Shaving (http://www.cvs.com/CVSApp/catalog/shop_sub_category.jsp?itemId=cat2120&filterBy=&navCount=20&navAction=push), accessed September 24, 2009; ‘‘Gillette Launches New GlobalMarketing Campaign,’’ Gillette website, July 1, 2009 (http://www.gillette.com/erresourcesite/pressRelease.aspx?id=75); ‘‘Gillette Reaches Agreement to Sell WhiteRain Brand, St. Paul Manufacturing Center,’’ Gillette News Release, March 23, 2000;‘‘Gillette Reaches Definitive Agreement to Sell Stationery Products Business,’’ GilletteNews Release, August 22, 2000; ‘‘Gillette Rings in New Era as World’s Leading MaleGrooming Brand,’’ Reuters, July 11, 2008 (http://www.reuters.com/article/pressRelease/idUS119120+11-Jul-2008+BW20080711), accessed September 24, 2009;‘‘Gillette’s Edge,’’ BusinessWeek, January 19, 1998, pp. 70–77; ‘‘Gillette Sues Schickover Razor Launch,’’ Promo, November 20, 2003 (http://www.promomagazine.com/ar/marketing_gillette_sues_schick/); ‘‘Gillette Unveils Newest Members of Its GilletteYoung Guns Lineup,’’ Procter & Gamble website (http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-newsArticle&ID=1106705&highlight=), accessedSeptember 24, 2009; ‘‘History of Gillette Razors,’’ The Executive Shaving Company(http://www.executive-shaving.co.uk/gillette-history.php), accessed September 24,2009; ‘‘How Gillette Is Honing Its Edge,’’ BusinessWeek, Sept. 28, 1992, p. 60;Lawrence Ingrassia, ‘‘Gillette Ties New Toiletries to Hot Razor,’’ The Wall StreetJourna1, September 18, 1992, pp. B1, B6; Lawrence Ingrassia, ‘‘Keeping Sharp,’’The Wall Street Journal, December 10, 1992, pp. A1, A6; Jeremy Kahn, ‘‘Gillette LosesFace,’’ Fortune, November 8, 1999, pp. 147–152; W. Chan Kim and Renee Mauborgne,Blue Ocean Strategy (Cambridge, MA: Harvard Business School Publishing, 2005);Mark Maremont, ‘‘Gillette to Shut 14 of Its Plants, Lay Off 4,700,’’ The Wall StreetJournal, September 29, 1998, p. A3; Mark Maremount, ‘‘Gillette to Unveil Women’sVersion of Mach3 Razor,’’ The Wall Street Journal, December 2, 1999, p. B14;

Sources 399


Mark Maremount, ‘‘Gillette’s New Strategy Is to Sharpen Pitch to Women,’’ The WallStreet Journal, May 11, 1998, p. B1; Slaven Marinovich, ‘‘A Competitive Edge in aCutthroat Market’’ brandchannel.com, November 21, 2005; Molly Prior, ‘‘Fighting forthe Edge in Shaving—Blade Wars: Shaving Report,’’ March 8, 2004 (http://www.findarticles.com/p/articles/mi_m0FNP/is_5_43/ai_114404714); Seema Nayyar,‘‘Gillette Jumps into Men’s Toiletries,’’ Brandweek, July 20, 1992, p. 6; Proctor &Gamble website, News Releases 2007–2009 (http://www.pginvestor.com), accessedSeptember 24, 2009; Glenn Rifkin, ‘‘Mach3: Anatomy of Gillette’s Latest Launch,’’(http://www.strategy-business.com/press/16635507/16651), accessed September 24,2009; Elayne Saltzberg and Joan C. Chrisler, ‘‘Beauty Is the Beast: PsychologicalEffects of the Pursuit of the Perfect Female Body,’’ in Jo Freeman (ed.), Women:A Feminist Perspective (Mountain View, CA: Mayfield, 1995), pp. 306–315;William Symonds, ‘‘Gillette’s Five-Blade Wonder,’’ BusinessWeek Online, September15, 2005 (http://www.businessweek.com/bwdaily/dnflash/sep2005/nf20050915_1654_db035.htm); ‘‘The Power of Fusion?’’ Consumer Reports (online—subscriptionrequired for access), July 2006 (http://www.consumerreports.org); Steve Ulfelder,‘‘Raising an RFID Ruckus,’’ Network World, September 29, 2003, p. 73; andMichael Wilke, ‘‘L’Oreal, Gillette and SC Johnson Crowd onto Gay Shelves,’’The Commercial Closet, March 17, 2005.



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